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GOLD WATCH
Weekly Review
with Fernando Gonzalez
Online Trading Academy
April 18, 2007
It is now
almost one year since the end of that spectacular run to
multi-decade highs in Gold. As we push towards that one-year
"anniversary," Gold has generated some renewed heat we
cannot ignore. A good deal of time has passed for the market to
absorb and correct the parabolic move to over $700 per ounce,
and the market has held-up strong throughout. In fact, over the
last few days, this market has reached its highest point since
that memorable top in 2006, as we shall see in the charts below.
Let's take a look at Gold on the weekly basis, and then later,
we take a look at the Gold/Silver Equities Sector, as well as
some individual Gold stocks that show a favorable degree of
relative strength:
CHART
NOTATIONS:
-
The Weekly
chart of Spot Gold above addresses the Intermediate-Term
time horizon
-
Note that
the market has just reached levels unseen since May 2006. In
February 2007, the market attempted to break through
resistance which turned-out to be unsustainable, such a
behavior I refer to as "decoy" in my classroom.
-
The decoy
in February lead to a powerful short-term thrust reversal,
which now has been completely retraced. In light of the
overall trend, this is a sign of strength in the market that
suggests further that the high point in 2006 (gray) is very
likely to be exceeded.
CHART
NOTATIONS:
-
The Weekly
chart of PHLX Gold/Silver Sector Index, or $XAU, above
addresses the Intermediate-Term time horizon.
-
The $XAU is
a measure of 16 major mining stocks. Note that mining stocks
are lagging behind the progress in Gold as it has not been
able to exceed the handful of swing highs over the course of
the last year. As we saw in the previous chart, Gold is
ahead by already having moved to levels unseen since May
2006.
-
The
weakness in the Gold index is largely on account of weakness
in some heavy-weight stocks within the index itself. Among
them are ABX, GG and NEM, which have been showing a good
dose of relative weakness.
Below are a
group of stocks within the Index that are showing a favorable
degree of relative strength, likely to continue as long as Gold
remains above our key areas marked in our first chart above:
Until next
time, happy trading!
© 2007 Fernando Gonzalez
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 Fernando
now enters his 10th year as an active trader, technical analyst and
content contributor to the Active Trading community and a long list of
popular financial media. In 1999 he authored the best-selling book Strategies
for the Online Day Trader (McGraw-Hill 1999), one of only a handful
of books on the topic that have ever reached the top 5 overall best
sellers on Amazon.com. In 1998, he was one of the original founding
members of the Online Trading Academy team, having developed the
original material and coursework. Fernando continues today as Newsletter
author, course developer and Instructor here at OTA, where he teaches
his highly regarded "Broad
Market Analysis" class.
DISCLAIMER:
This newsletter is written for educational purposes only. By no means do
any of its contents recommend, advocate or urge the buying, selling or
holding of any financial instrument whatsoever. Trading and Investing
involves high levels of risk. The author expresses personal opinions and
will not assume any responsibility whatsoever for the actions of the
reader. The author may or may not have positions in Financial
Instruments discussed in this newsletter. Future results can be
dramatically different from the opinions expressed herein. Past
performance does not guarantee future results.
ABOUT THE WEEKLY
REVIEW:
The weekly review heavily focuses on the application of Technical
Analysis on the Broad Market Levels. You will rarely see individual
Stock Picks on the Weekly Review! It is the author's belief that most
Individual Stocks (certainly not all) will follow the overall direction
of the Broad Market that surrounds them, as well as the Sectors they
comprise. Discussion is focused heavily upon the Major Market &
Sector price activity.
Rarely
also will you see discussion of the fundamental, macro-economic or
political nature in the Weekly Review. By focusing only on the
technical, or price & volume aspects of the major measures of the
market, Fernando hopes to satisfy any equity trader's needs for a
qualified discussion and forecast of the overall direction of equities,
whether it be the Short, Intermediate, or Long-Term time horizons.
Whether you trade the Index Futures, Index Tracking Stocks or Individual
Equity Market Instruments, having an experienced eye on the conditions
of the broad market that surrounds you is extremely important!
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